EU officials stick their heads in the sand – Oli Rehn was the latest

2011-08-06

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Oli Rehn follows the latest examples of his collegues at the EU and attributes the causes of the crisis on the metaphysical. EU officials do not want to accept that their failing practices and their serious misunderstanding of the structure of the crisis are the real cause of contagion and the spiraling of the crisis Image source: EUObserver

When I commented yesterday and the day before on the false statements of European Commission President, Jose Manuel Barroso, and on European Union President Herman Van Rompuy, I assumed that those would be the last statements coming from the side of the EU challenging reason and real world facts. But I was apparently proven to be wrong, since yesterday European Commissioner on economic affairs, Oli Rehn joined his colleagues in this failing attempt to “calm down” the markets.

He too seemed to put the blame for the crisis on the metaphysical. For Rehn the crisis is caused by “loose talk, fear and greed”. So for Mr. Rehn there are no real problems, or if there are those are insignificant compared to the “loose talk, fear and greed”.

The speech of Mr. Rehn is indicative of the approach the EU has towards the crisis. They simply stick their heads in the sand. They ignore all the real problems that have been accumulated and which are the true sources of the current systemic crisis of the euro (which they falsely call a “debt crisis” – for more see my analysis The crisis in the EU spirals because it is systemic).

For European officials and for certain European leaders it seems that there is no seriously malfunctional banking sector, there is no fallacious monetary policy, there is no persistent unemployment and negative growth. There are no flaws in the way the EU deals with the crisis. Only “loose talk, fear and greed” as Rehn said, “biased credit rating agencies” as Barroso was saying when Portugal got a junk rating, and “astonishing” market expectations as Rompuy wrote in his opinion piece a few days ago.

Instead of embracing reality and accepting that a) the crisis is systemic, b) they have made serious mistakes so far, c) a solution requires a fundamental change of approach, European leaders keep on searching for exogenous and irrelevant factors to put the blame for their failures so far.

Reality is there, those who are in charge of EU matters must stop pretending they do not see it, because all they do in that way is to make things worse. Do they really believe that by making statements that aim at calming down the markets, they succeed? Absolutely no. The markets will only calm down once concrete solutions are put to practice. Theories and metaphysical factors do not affect the behavior of the markets. They only fuel speculation even further.

Finally, how will Mr. Barroso justify his groundless arguments about the credit rating agencies who are biased against the EU, now that Standard and Poors has downgraded the credit rating of the US?

I only wish European leaders become serious before its too late.